BIR Ruling No. 298-12

May 3, 2012 BIR RULING NO. 298-12 Secs. 30 (E); 101 (A) (3) NIRC; BIR Ruling No. 024-2011 Nehemiah Devt. Project, Inc. 305-B-Orient Square Bldg. Emerald Ave. Ortigas Center, San Antonio Pasig City 1605 Attention: Ms. Marian Danzel T. Tan Treasurer Gentlemen : This refers to your letter request dated 01 September 2010 for exemption from the payment of donor's tax pursuant to Section 101 (A) (3) of the 1997 Tax Code, as amended. It is represented that NEHEMIAH DEVT. PROJECT, INC. ("NEHEMIAH"), with Taxpayer's Identification No. (TIN) 001-460-073-001, is duly organized under the laws of the Philippines; that is registered with the Securities and Exchange Commission (SEC) under Registration No. 169715; and that the purposes for which it was incorporated are the following: 1. Primary: To assist the growth of the Metro Manila Bible Community, Bagong Ilog Christian Fellowship and other churches in the Philippines. 2. Secondary; (1) To train mountain farmers for conservation of forest resources, and (2) To rehabilitate drug dependents, and (3) To conduct other businesses or projects as may be necessary for the establishment and the growth of Christian Churches in the Philippines. HaAIES It is also represented that on July 27, 2010, DAIICHI PROPERTIES AND DEVELOPMENT, INC. ("DAIICHI"), a domestic corporation, donated Condominium Unit (CCT No. Pt-26453), under Tax Declaration No. 001-11830 and Parking Slot (CCT No. Pt-27692) under Tax Declaration No. 001-12227 located at The Orient Square Building in Ortigas Center, Pasig City to NEHEMIAH. The donated unit will be used as the principal office of NEHEMIAH, as well as, the place for its religious and charitable activities, including worship services, bible studies and training center for church planters and missionaries. In support of its application, NEHEMIAH has completely submitted the following documents on February 23, 2012: 1. Letter request for ruling; 2. Deed of Donation; 3. Donor's Tax Return; 4. Copy of the CCT & Tax Declaration; and 5. Other documents. In reply, please be informed that this office hereby grants tax exemption on the payment of donor's tax on the Condominium Unit (CCT No. Pt-26453), under Tax Declaration No. 001-11830 and Parking Slot (CCT No. Pt-27692) under Tax Declaration No. 001-12227 donated to NEHEMIAH by DAIICHI. In as much as NEHEMIAH is a non-stock and non-profit religious and charitable organization duly registered with the Securities and Exchange Commission (SEC), donations to it are exempt from the payment of donor's tax pursuant to Section 101 (A) (3) of the Tax Code of 1997, as amended, subject to the condition that not more than thirty percent (30%) of said gifts shall be used for administration purposes. (BIR Ruling No. 024-2011 dated January 28, 2011) If the donor is a value-added tax (VAT) registered person and the donation is an ordinary asset, the donation is subject to VAT pursuant to Section 4.106-7 of Revenue Regulations No. 16-2005 the same being considered a transaction deemed sale. If the donor is not a VAT registered person, the donation is exempt from VAT. cDAITS If the same property acquired by gift is subsequently conveyed by way of sale or exchange, the sale will be subject to corporate income tax on the gain realized therefrom which is determined by deducting from the gross selling price the historical cost or the adjusted basis thereof, as it would be in the hands of the donor, pursuant to Section 27 in relation to Section 101, both of the Tax Code of 1997, as amended, and consequently to the creditable expanded withholding tax under Section 2.57.2 of Revenue Regulations No. 2-98, as amended. If NEHEMIAH donates the same property donated to it to a non-exempt donee, it shall be liable for donor's tax pursuant to Section 98 of the Tax Code of 1997, as amended. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue